Blackstone said to plan US$1.9 billion Tokyo office sale

[TOKYO] Blackstone plans to sell the office portion of Tokyo Garden Terrace Kioicho for about 300 billion yen (US$1.9 billion), according to people familiar with the matter.

The New York-based alternative asset manager is negotiating with a fund set up by a real estate asset management firm under Daiwa Securities Group, according to sources who declined to be named as the matter was not public. Blackstone is also considering packaging some beneficial interests in the property as digital securities, allowing smaller units to be sold to individual investors, they said.

Spokespeople for Blackstone and Daiwa Securities Group declined to comment.

The potential sale would come about two years after Blackstone agreed to acquire the landmark mixed-use complex from Seibu Holdings for about 400 billion yen in what the firm described at the time as the largest real estate investment in Japan by a foreign investor.

The deal would capitalise on strong demand for prime office space in the Japanese capital as Tokyo’s office market has remained resilient even as rising interest rates increase financing costs for property investors. Asking rents across the capital’s five central wards have climbed to their highest level since the year 2000, according to data from Sanko Estate. 

Blackstone will issue a total of 34.1 billion yen in digital securities through a special-purpose company to support the deal, according to a filing on Friday (Oct 30) from Mitsubishi UFJ Trust and Banking Corp, the issuer of the tokens. Daiwa’s subsidiary will underwrite the offering and sell mainly to individual investors.

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Tokyo Garden Terrace Kioicho is a 36-story complex in the heart of the Japanese capital that includes offices as well as a hotel, residences and retail space. The building was completed in 2016. The residential building, which was originally a rental property when the company acquired it, has been turned into condominiums, with the majority of the 135 units sold.

In July, Seibu said it would acquire trust beneficiary rights to the hotel portion of the property and other assets from Blackstone through a private placement fund. BLOOMBERG